The advent of the Internet has resulted in the ability to communicate data across the globe instantaneously, and will allow for numerous new applications which enhance consumer's lives. One of the enhancements which can occur is the ability for the consumer to receive advertising which is relevant to their lifestyle, rather than a stream of ads determined by the program they are watching. Such “targeted ads” can potentially reduce the amount of unwanted information which consumers receive in the mail, during television programs, and when using the Internet.
From an advertiser's perspective the ability to target ads can be beneficial since they have some confidence that their ad will at least be determined relevant by the consumer, and therefore will not be found annoying because it is not applicable to their lifestyle.
In order to determine the applicability of an advertisement to a consumer, it is necessary to know something about their lifestyle, and in particular to understand their demographics (age, household size, income). In some instances it is useful to know their particular purchasing habits. As an example, a vendor of soups would like to know which consumers are buying their competitor's soup, so that they can target ads at those consumers in an effort to convince them to switch brands. That vendor will probably not want to target loyal customers, although for a new product introduction the strategy may be to convince loyal customers to try the new product. In both cases it is extremely useful for the vendor to be able to determine what brand of product the consumer presently purchases.
There are several difficulties associated with the collection, processing, and storage of consumer data. Collecting consumer data and determining the demographic parameters of the consumer can be difficult. Surveys can be performed, and in some instances the consumer will willingly give access to normally private data including family size, age of family members, and household income. If the consumer does not provide this data directly, the information must be “mined” from various pieces of information which are gathered about the consumer, typically from specific purchases.
Coupons are heavily used as a marketing tool by manufacturers to gain better understanding of consumer purchasing behavior. Coupons are normally distributed to consumers through any one of a number of different channels, including newspapers as Free Standing Insert (FSI) coupons, advertising circulars, direct mailings, e-mail, and the internet. To redeem a coupon, a consumer must present the coupon in connection with the purchase of a product identified on the coupon at a retail establishment. The retailer, upon receiving the coupon, will deduct the face value of the coupon from the total amount owed by the consumer.
Manufacturers generally require retailers to provide the original redeemed coupons along with invoices for reimbursement. Retailers typically bundle redeemed coupons and ship them to third party clearinghouses, which sort the redeemed coupons by product manufacturer. The sorted coupons, together with the retailer invoices, are then shipped to a manufacturer's agent. The manufacturer's agent, which could be a clearinghouse, attempts to determine whether the invoice amount is supported by the redeemed coupons. The manufacturer's agent may issue a check to the retailer through the clearinghouse as reimbursement for the value of the coupons verified by the agent as genuine. Any invoiced amount that is not adequately supported by the provided original coupons will not be paid by the manufacturer or its agent. In a normal processing cycle, retailers usually do not receive reimbursement checks until six to eight weeks after the original coupons were redeemed. Redemption of manufacturer coupons requires retailers to forego receipt of full coupon value for items purchased using a coupon for a significant period of time.
The disadvantages of traditional method of coupon processing include not only significant time delay but also ability to measure the effectiveness of marketing campaign in a timely manner. For instance, manufacturers cannot precisely determine whether a recent sales promotion program has contributed to a bona fide product sale, because traditional methods of coupon redemption do not correlate a specific product sale to each specific redeemed coupon at the time of redemption at a retail store. Additionally, coupons are often bundled together by retail chain rather than by a particular retail outlet, thus, manufacturers receive no information regarding the date and place of redemption or the precise products or product configuration purchased in connection with the redemption of the coupon. Manufacturers have only a general idea of the volume of product sales expected for particular retail chains.
Most of today's coupons are delivered to consumers as printed offers in newspapers and magazines, Free Standing Insert (FSI) in newspapers, components in direct mail advertising programs. They are also given to consumers in stores or are attached to or placed inside product packaging. Typically, the consumer must cut out the coupons, sort them, and present the individual pieces of paper for redemption at the time of purchase. At the point of purchase, each coupon must further be checked to verify that it has not expired. Consumers find coupons to be more hassle than they are worth. Detached or detachable coupons are unkempt and clutter one's pockets or pocket book. Additionally, consumers find that coupons are unorganized and that desired coupons are difficult to find when needed such as when checking out. The disorganized nature of coupons also makes it difficult to keep track of valid coupons such as coupons which have not expired.
Coupons are also used by the entertainment industry to increase ticket sales. The entertainment industry issues over 250 million tickets every year. Over 55% of these tickets went unsold. In today's environment, venue sponsors and event promoters have limited ability to sell tickets within 48 hours prior to the start of the show/event. To make matter worse, artists and performers usually don't allow venue sponsors and event promoters to publicly announce that, one, tickets are still available and, two, discount the ticket price.